The European Commission welcomes today's ruling by
the Court of First Instance upholding the European Commission’s 2004
decision on Microsoft's abuse of its dominant market position and confirming the
totality of the fine imposed. In this decision, Microsoft was fined €497
million for infringing the EC Treaty rules on abuse of a dominant market
position (Article 82) by leveraging its near monopoly in the market for PC
operating systems onto the markets for work group server operating systems and
for media players (see IP/04/382
and MEMO/04/70).
This conduct hindered innovation in the markets concerned to the detriment of
consumers. To put an end to this abusive behaviour, the Commission ordered
Microsoft to disclose interoperability information which would allow
non-Microsoft work group servers to achieve full interoperability with Windows
PCs and servers and to offer a version of its Windows operating system without
Windows Media Player. The Court’s ruling confirms that the Commission was
right to prohibit Microsoft's anti-competitive conduct which harmed competition
to the detriment of consumers.

Competition Commissioner Neelie Kroes stated: “The Court has
upheld a landmark Commission decision to give consumers more choice in software
markets. That decision set an important precedent in terms of the obligations of
dominant companies to allow competition, in particular in high tech industries.
The Court ruling shows that the Commission was right to take its decision.
Microsoft must now comply fully with its legal obligations to desist from
engaging in anti-competitive conduct. The Commission will do its utmost to
ensure that Microsoft complies swiftly."

In upholding the Commission’s decision the Court of First Instance
(CFI) confirmed the Commission’s finding that Microsoft had abused its
dominant position in the PC operating system market by refusing to disclose
interoperability information that would enable its competitors to fully
interoperate with Windows PCs and servers and by tying Windows Media Player with
its dominant Windows PC operating system. The CFI confirms that both types of
conduct reduced competition in the relevant markets, thereby preventing
innovation and choice to the substantial detriment of consumers. The
Commission's decision established that Microsoft prevented innovative server
products from being brought to the market, and that competition in the streaming
media player market was distorted.

The CFI confirmed the Commission's assessment as to the appropriate legal
tests to be applied, and the evidence needed to satisfy those tests.

However, the CFI annulled the decision in so far as it orders Microsoft to
submit a proposal for the appointment of a monitoring trustee with the power to
have access, independently of the Commission, to Microsoft’s assistance,
information, documents, premises and employees and to the source code of the
relevant Microsoft products and in so far as it provides that all the costs
associated with that monitoring trustee be borne by Microsoft.

The Commission will carefully analyse the judgment and will consider its
implications for future antitrust enforcement in these sectors and in others. It
is clear, however, that this is an exceptional case with extremely harmful
abuses by a company in a quasi-monopolistic position on a market.

The Commission decision upheld by the CFI focuses on the promotion of
interoperability, which contributes strongly to innovation and competition in
the software industry whilst also fully recognising the importance of
intellectual property rights as incentives for innovation. The decision also
made clear that bundling into the Windows operating system of software products
otherwise available on a stand-alone basis had the effect of excluding
competitors, thereby leading to reduced consumer choice liable to reduce access
to innovative products.

Background

Work group server operating systems are operating systems running on central
network computers that provide services to office workers around the world in
their day-to-day work such as file and printer sharing, security and user
identity management. The Commission decision ordered Microsoft to disclose to
competitors interoperability information which would allow non-Microsoft work
group servers to achieve full interoperability with Windows PCs and servers -
that is to say for their servers to be able to seamlessly 'communicate' with the
ubiquitous Windows OS. Microsoft was also required to offer a version of its
Windows OS without Windows Media Player. On 7 June 2004, Microsoft filed an
application for annulment of this decision with the
CFI.See also
http://ec.europa.eu/comm/competition/antitrust/cases/microsoft/